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Abstract

Rural-based micro-enterprises have recently gained broad attention in developing countries where most citizens live in rural areas, and their livelihoods depend on entrepreneurial undertakings. The nexus between rural enterprises and export trade is increasingly becoming vital as most rural inhabitants engage in handicrafts. This study assesses the contribution of Business Development Services (BDS) to rural-based handcraft Micro Enterprises (MEs) in export markets. Data were collected from 92 owners of handicrafts MEs in Ololosokwan and Sukenya, Ngorongoro District Arusha, Tanzania. Multivariate logistic regression analysis reveals that 18.9 to 74.5% of the variation of handicrafts MEs’ participation in export markets was explained by the variation in BDS access. It was also found that technical support, entrepreneurship and leadership training programs have a significant relationship with rural-based MEs’ participation in export markets. It is concluded that BDS contributes largely to the participation of rural-based MEs in export markets. The study recommendations include adopting a supportive institutional and policy framework for the frequent provision of BDS at low costs and specific MEs’ needs and developing business networking platforms that will provide important export market information. This study contributes to advances in the body of literature on effective BDS strategies in the handicraft industry. More importantly, it brings new insights into how BDS is linked with export market participation among Maasai rural-based handcraft MEs in an emerging nation.

Keywords

rural enterprises BDS participation export markets handicrafts and Tanzania

Introduction

Rural-based micro enterprises (MEs) are increasingly recognized as an important vehicle for the development of many economies (Aggarwal, 2018). They contribute significantly to the country’s economic stability and poverty alleviation through the emergence of rural industries, income, GDP, manufactured output, employment, investments, manufactured exports, taxation, and rural-urban integration (Naseef & Jyothi, 2019; Ranman & Ahsanul, 2021). While we acknowledge their economic importance, MEs face many obstacles that limit their participation in export markets. In Tanzania, MEs face challenges such as access to finance, low level of formalization, limited formal education and training, deficiencies in record keeping, low level of business association membership, poor planning, financial management, and gaps in knowledge of BDS providers (Kweka et al., 2022b; United Republic of Tanzania [URT], 2012; UNIDO, 2012; Walonzi, 2014; WB, 2011).

The handicrafts sector is largely rural-based small-scale industries whose significant contribution to rural economies is second after agriculture (Gupta et al., 2021; Oridi et al., 2022). Its economic contribution can be viewed by creating non-farm employment in the rural sector and supplementary income to seasonal agricultural workers and tackling poverty (Deb & Molankal, 2021; Hansrod, 2019; Tripathi et al., 2022; Wondirad et al., 2022; Yadav et al., 2020). The key players in the Tanzanian handicraft industry include handicrafts producers (i.e., the craft workers and artisans), marketers (i.e., mainly handicrafts exporters), and the supporting system (basically the government) (Makyao, 2013). They produce and market crafts products like bone jewellery, baskets, candles, traditional decorations, tingatinga paintings, ebony wood, wood carvings, and bowls (Anderson, 2011; Kazungu & Mchopa, 2022).

The handicraft industry in Tanzania is composed of many MEs actors who are exposed to quite a large number of constraints that limit them from participating effectively in export markets. These include a lack of financial support, marketing support, business management, and entrepreneurship skills, networking with suppliers, financial management, lack of supporting institutions, low craft quality, and access to business information (Ipsos-Synovate, 2012; Walonzi, 2014). Other constraints are low level of business networking, equipment application, packaging, designing, business management, absence of active associations of exporters, market information, absence of viable strategies for sectoral development, and lack of active participation in trade fairs and exhibitions (Kazungu & Mchopa, 2022). Moreover, they operate on small scales, with traditionally designed outputs that do not meet the quality requirements of international market trends, needs, and demands (Anderson, 2011).

Export has been widely acknowledged as an important economic activity in integrating world markets and driving the global economy (Jamir, 2020). It contributes to improved foreign investments, profitability, trade balances, employment, and poverty reduction (Al-Hyari et al., 2012; Singh & Fatima, 2015; Zilwa, 2020). However, despite exporting being considered inevitable, rural handicrafts MEs do not tap this export opportunity effectively. This is attributed to internal barriers (i.e., products, resources, firm scale, management, and experience) and external barriers (i.e., business environment, the market forces, infrastructure facilities, trade policies and laws, trade financing regimes, networks, cultural difference, and geographic factors) (Dusoye et al., 2013).

Various initiatives have been put in place following export barriers to strengthen this industry and its exports. These comprise the promotion of global market opportunities like the East African Community (EAC), the African Growth and Opportunity Act (AGOA), and the Everything But Arms (EBA) arrangement in the European Union (WTO, 2012). Other local initiatives by the Government of Tanzania include establishing the Tanzania Trade Development Authority (TanTrade), which organizes training programs, networking, marketing, trade fairs, and exhibitions (Mpunga, 2016). The establishment of agencies like the Small Industries Development Organisation (SIDO) and Vocational Education and Training Authority (VETA) gives technical support to small-scale manufacturers like handicraft operators. Despite these deliberate efforts, the country’s exports (handicrafts inclusive) remain low. Thus it is a strategic imperative to have an in-depth understanding of what limits the participation of Tanzanian rural-based handicrafts enterprises.

One of the limiting factors to MEs’ participation in export markets is access to non-finance services well known as Business Development Services (BDS). The BDS is a multi-dimensional framework comprising entrepreneurship programs, vocational training, quality inputs, product development, financial training, marketing assistance, legal services, policy advocacy, networking, policy environment, human resource development, new technological supports, and management training (Kazungu & Mchopa, 2022; Njoroge & Kaluyu, 2020; Reji, 2020). It should be known that while financing plays a major role, the provision of critical non-finance services (i.e., BDS) is critical to MEs development (Kiiru & Wairimu, 2022). These services are vital to MEs as they strengthen the performance, productivity, profitability, and sustainability of their businesses (Munishi & Kirumirah, 2020; Zilwa, 2020).

Empirical studies reveal that most successful enterprises have access to and use BDS resources (Mwaanga, 2014; Osinde et al., 2013; Suzuki & Igei, 2019). However, access to BDS is argued to be a third challenge (after finance and markets) that most MEs face (Mori, 2014). Also, the demand for BDS in Tanzania remains terrifyingly low, mainly in rural areas. This is accounted for by the fact that BDS is associated with high costs, is not sustainable, is developed to fit donor’s requirements, lacks information on the existence and relevance of BDS, the inexperience of business support services, unwillingness to pay for services, most BDSPs have a limited product offers (Abeysekera, 2020; Mori, 2014, 2016; Walonzi, 2014). As a result, most rural MEs make limited utilization of BDS and reduced demand for services available in the market, affecting their participation in export markets.

The need to link BDS with export market participation has become particularly important for rural-based MEs striving to attain superior performance (Anderson, 2011). However, most studies (i.e. Kimando et al., 2012; Mazanai & Fatoki, 2011; Mori, 2016; Osinde et al., 2013) have explored the wide relationship between BDS and markets participation leaving a knowledge gap on the participation of rural-based handcraft MEs in export markets. Therefore, this gives evidence of the lack of local studies on this observation. From this context, this study anticipated filling this relatable literature gap by focusing on four BDS: Entrepreneurship training programs, leadership training, technical support, and business networks. In an attempt to fill this gap, the study aims at assessing the linkage between BDS and the participation of rural-based handcraft MEs in export markets. The study objectives are to examine the influence of entrepreneurship training programs, leadership training, technical support, and business networks on participation of Tanzanian rural-based handcraft MEs in export markets.

Literature Review and Hypotheses Development

Definition and Classification of BDS

BDS are defined as a wide variety of non-financial services offered to businesses which result in effective entry, existence, efficiency, competitiveness, and growth of MEs that promote their performance, markets access, and competitiveness (Kiiru & Wairimu, 2022; Miehlbradt & McVay, 2003; Olomi, 2009). BDS are predominantly meant for skills transfer and business advice. Vibrant BDS are aimed at serving individual enterprises and not larger enterprise communities. BDS is usually delivered to MSMEs through workshops, seminars, trainings and vocational training, business information services, incubators, technological transfer and promotion, trade fair exhibitions, and consultancy (Kweka et al., 2022a). The scope of these services is also taking the form of assistance in terms of access to markets, alternative financing mechanisms, technical assistance; networking, input supply; technology and product development and infrastructure facilities, policy advocacy, business sustainability, and institutional capacity development (Asrat, 2022; Irawan & Suryani, 2020; Kazungu, 2023). Thus, the use of BDS among MSMEs results in improved market accessibility, business competitiveness, productivity, profitability, and enterprise performance (Munishi & Kirumirah, 2020; Zilwa, 2020).

Despite their importance, access to BDS in emerging economies is still in its infancy stage. This is caused by demand-driven constraining factors such as scarce finance, poor coordination, and scant information on BDSPs amongst MSMEs operators (Kweka et al., 2022a). Other demand-driven limitations include MEs’ slow rate of adopting new technologies, knowledge and insufficient human resources, and geographical settings (Kweka et al., 2022b). On the other side, the supply-driven constraints include insufficient resources by BDSPs which limits their ability to deliver their BDS to MEs. These resources take the form of human capital, physical resources, network resources and information systems. Nonetheless, it is very important to understand that the level of resource constraints is different between BDSPs.

MEs Conceptualization and Participation in Export Markets

A number of initiatives to conceptualize and define MEs have been made across the globe. The most frequently used definitions are based on quantitative measures such as the initial capital investment, annual sales turnover, number of workers employed, volume of outputs, and use of energy (Olomi, 2009). In Europe, a micro-enterprise employs not more than 10 with a turnover of less than €2 million. (Central Statistics Office, 2023; O’Shanahan et al., 2023). Malaysia defines MEs as companies with annual sales turnover not exceeding MYR250,000 and employees less than 5 (Cheong et al., 2020). In Kenya, MEs employ between 1 and 50 (Government of Kenya, 2005a, 2005b) while in Uganda, they employ less than five, with a total assets value of up to UGX 10 million (Uganda Investment Authority, 2018). In Tanzania, MEs employ up to four with a capital investment of not more than Tshs. five million (Gamba, 2019; UNIDO, 2012; URT, 2012). Based on these definitions and categorizations, most of these MEs operate in the informal sector, mainly in agriculture, trading, service, small-scale manufacturing, and mining. Despite their smallness, Tanzanian MEs contribute to 27% of the country’s GDP and employ 23.4% of the workforce (URT, 2012). Despite this importance, Tanzanian MEs’ participation in export markets is very little and less documented (Kazungu & Mchopa, 2022). This is attributed to the fact that they are less equipped with BDS resources which limits their ability to explore potential export opportunities. This, therefore, limits handicrafts MEs’ ability to use their export potential and perform well in international business.

Entrepreneurship Training and MEs Participation in Export Markets

MEs in rural areas are introverted by entrepreneurship training which limits them from acquiring enough knowledge, experience, skills, and resources that are important to handle challenges that adversely affect their market performance. Access to entrepreneurship training reveals a wide performance gap between enterprises which are trained and those which are not (Mori, 2016; Osinde et al., 2013). Entrepreneurship training is positively influencing the development of entrepreneurship attitude in terms of entrepreneurship mindset, entrepreneurship capability, and entrepreneurship status and enterprise development (Indarti, 2021). Thus, MEs with entrepreneurship training are more likely to persist and realize a competitive advantage in the industry (Kimando et al., 2012). This, therefore, lead to an increasing need for entrepreneurship training among MEs. Indeed, studies by Kazungu (2020b) and Mwaanga (2014) confirm that firms with access to entrepreneurship training in wide areas of business development reveal better performance. Herein, entrepreneurship training programs are also considered to be very important in export markets. Gaining access to these trainings will certainly stimulate the participation of rural-based handicraft MEs in export markets. Given this importance, there is a need for the development of a policy framework and institutional context which promotes the provision of entrepreneurship training programs more frequently, at low costs and for specific MEs’ needs in developing economies (Kazungu, 2020b). Therefore, the following hypothesis is offered:

H₁: Entrepreneurship training positively affects participation in export markets by handicrafts MEs

Leadership Training and Participation in Export Markets

Contemporary studies advocate that leadership training for owner-managers of MEs has an affirmative impact on their growth potential and performance (Andaregie et al., 2022). Nevertheless, the range of its special effects is erratic, which calls for more research studies on factors that might explain when and why leadership training is effective for operators of MEs. The relationship between leadership training and participation in export markets has been an area of interest to researchers in MEs development. In this study, we focus on leadership training programs offered to rural-based handicraft ME operators. These training programs have either direct or indirect relationships with the MEs’ development. Previous studies have acknowledged that Leadership training is associated with business skills, attitudes, knowledge, and traits that promote business performance (Paul, 2022; Vaughn, 2020). From the perspectives of handicraft MEs, studies (i.e. Anderson, 2011; Ipsos-Synovate, 2012; Kazungu, 2020a; Walonzi, 2014) suggest that access to leadership training has a substantial effect on participation in export markets by handicrafts MEs. Hence, from these arguments, the hypothesis is proposed as follows:

H₂: Leadership training has a positive effect on participation in export markets by handicrafts MEs

Technical support and Participation in Export Markets

The absence of supporting institutional settings and policies environment is one of the common limitations facing the development of the ME’s handicrafts industry in developing economies (Hansrod, 2019; Oridi et al., 2022). To promote the development of handicrafts MEs, the government and other development partners in the industry need to offer the requisite technical support to the entrepreneurs to enable them to use innovative ways of doing business. The increased use of new technologies by business operators will certainly have significant implications for their performance (Janssen et al., 2020). Similarly, MEs should reduce the use of conventional and older means of doing business, and reliance on existing technologies that limit their innovativeness. MEs should embrace new technologies and new ways to improve their business operations and have to invest more to penetrate export markets (Tripathi et al., 2022). While numerous studies have shed light on technological support to MEs, access and use of such support among handicrafts MEs have been under-researched. Facilitators such as support from BDSPs may complement Government efforts and influence their Participation of rural-based handicrafts operators in export markets. These efforts may take the form of support like technological advice, technical strategies, designing skills, technical textiles, and technological skills (Agarwal, et al., 2023; Tripathi et al., 2022). Therefore, technological practices should also be effectively used in the overall MEs management and strategic marketing undertakings to realize sustainable growth and superior export market participation. Thus, hypothesis three is formulated:

H₃: Technical support is positively influencing participation in export markets

Business Networks and Participation in Export Markets

Participation in export markets is considered to be a critical resource for ascertaining and enjoying international marketing opportunities, which is highly accelerated by access to viable business networks among the MEs (Kazungu, 2020a). It is also certain that these networks are critical in realizing strategic and beneficial relationships with other businesses in international markets which are of importance for their engagement in such markets. Business networks are extensively viewed as an important ingredient to firms’ innovative capabilities, international enlargement, resources, learning, and recognition of emerging export opportunities (Lorenz et al., 2018; Pedersen et al., 2019). These networks occur based on ties like personal (like kinship and friendship), professional, religious, and business relationships (Ismail, 2022; Kazungu, 2020a; Olomi, 2009) and are also well-known for their role in integrating small firms’ supply chains in export markets and thus making them more effective and efficient in attracting more customers in foreign markets (Katsikeas et al., 2020). Likely, Business networks facilitate access to export information which contributes to strengthened business relationships and export market growth (Bianchi & Mathews, 2016). Thus, we posit the hypothesis as follows:

H₄: Business networks are positively influencing participation in export markets.

BDS and Participation in Export Markets

BDS relates to firm Participation in export markets, such as capacity building in terms of entrepreneurship training, leadership training, and access to facilities like technical support, and network facilities (Abeysekera, 2020; Asrat, 2022; Kweka et al., 2022a), which may well, influence their overall performance and stimulate their participation in export markets (Kiiru & Wirimu, 2022; Zilwa, 2020). It is arguably that, through BDS provision, MEs attain innovative products, marketing skills, technical know-how, technological capabilities, and markets which are vital in facilitating their growth (Mori, 2014). This enables MEs to grow, operate efficiently, and perform well in local markets and acquire the potential to participate effectively in international markets. Therefore, the following hypothesis is offered:

H₅: Collectively, BDS have a positive influence on the participation of handicrafts MEs in export markets

The Proposed Conceptual Model

Based on this theoretical background, this study proposes the following conceptual model (Figure 1) to summarize the underlying relationships between variables of the study. The conceptual model shows the theoretical ground of the BDS framework, the model encompasses the contribution of BDS components (i.e. entrepreneurship training, leadership training, technical support and business networks) to the participation of rural-based handicraft MEs in export markets.

Figure 1.

Conceptual model.

Methodology

The descriptive research design examined the degree of association between predictor and outcome variables. The design was also adopted to give descriptions of the handicrafts industry, rural-based MEs, the artisans, institutional contexts, and settings. The design also protects from bias-maximized reliability and involves quantitative and qualitative data (Wilson, 2014). The study population constituted the owners of rural-handicraft MEs in Ololosokwan and Sukenya villages in Ngorongoro Arusha. The study adopted stratified random sampling for greater statistical efficiency (Cooper & Schindler, 2018).

An interviewer-administered questionnaire was used to collect data from 92 operators of handicraft-exporting MEs obtained through the census in Ololosokwan. This method is very useful for respondents who have no educational background and it yields in-depth information and has a high response rate. Also, this method gives respondents the freedom to express their views and opinions more objectively regardless of their level of education as it is flexible, free from bias and researchers’ influence, and much information can be collected relatively quickly and has higher response rates (Kothari & Garg, 2019). To supplement the information gathered through questionnaires, nine owner-managers of rural-based handcraft MEs were interviewed. Interviews ewer incomplete answers have a high response and return rate, involve reality, controlled answering order, and high flexibility. In addition, various literature related to this study were reviewed. This involved scanning and revising both theoretical and empirical literature on sectoral policies, published trade reports, research reports, government publications, books, trade associations, records on handcrafts, BDS, and sector-wise exports. This technique according to Saunders et al. (2019) gives genuine information and evidence of interest to the current study. Qualitative data analysis was done by categorizing data into themes and opinions given by interviewees, comparing, contrasting, and then matching with the literature reviewed and empirical evidence. Descriptive statistics analysis and inferential analysis were used for analysis.

The study used a multivariate logistic regression analysis (equations (1) and (2)) to model the association between BDS and the participation of rural-based MEs in export markets. Multivariate regression analysis was used in this study as it supports the prediction of the outcome variable, depending on two or more predictor variables interrelated to the outcome variable. This kind of analysis also helps to interpret the underlying relationship and correlation between the outcome and the predictor variables in the data set (Büyüköztürk, 2017; Cer, 2019). The Multivariate regression is not a biased selection and the Hosmer-Lemeshow goodness of fit test was used to assess the model fit (Maity & Sahu, 2020). In this analysis, the rule of thumb is, all variables with a p-value less than 0.25 in univariate analysis were entered jointly into multivariate logistic regression. The Odds ratios (ORs) and 95% confidence intervals were then calculated (Jemal et al., 2021; Wilson et al., 2020). Hypotheses were tested by using p-values at a confidence interval of 95%, with the rule being if p < .05 we accept the alternative hypothesis and reject the null hypothesis (Cooper & Schindler, 2018).

\begin{matrix} Logit [p (x)] = & \log [p (x) / 1 - p (x)] = α_{o} + β_{1} EP + β_{2} L T_{2} \\ + β_{3} TS + β_{4} B N + μ_{o} + μ_{o} . . . . . . . . . . . . . . \end{matrix}

(1)

Further, equation (1) was transformed into equation (2) by fitting data:

\begin{matrix} Logit (p_{i}) = & α_{o} + β_{1} EP + β_{2} L T + β_{3} TS + β_{4} B N \\ + μ_{o} . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \end{matrix}

(2)

Whereby:

Outcome variable:
Logit (p_i) = Y_i =	The probability that rural-based ME participates in export markets (PEM) or otherwise, coded as 0 or 1 respectively)
Predictor variables:
EP =	Entrepreneurship training programs attended
LT =	Leadership training programs attended
TS =	Technical support accessed
BN =	Business networks established
α_o =	Model co-efficient
β₁ – β₄ =	Regression coefficients for predictor variables
µ_o =	Stochastic disturbance term

Results and Discussion

Demographic Description of Respondents

The results show that female-owned rural-based handcraft MEs outnumbered males-owned MEs by 79 to 21%, thus a 58% difference (Table 1). This is in line with Tripathi et al. (2022) and Mori (2014) who observed an increasing dominance of females in owning and running enterprises as opposed to their male artisan counterparts. The domination of female-owned handicraft enterprises in the study area contributes significantly to rural economies by creating income, employment, and poverty reduction (Hazarika & Goswami, 2018; Oridi et al., 2022). This gender difference in the industry is accounted for by economic changes, technological innovations in the crafts area, lightness of tasks, and special socio-cultural characteristics favoring female involvement in the crafts industry (Almamari, 2015).

Table 1.

Summary of Sample Characteristics.

Demographic item	Category	Frequency (n = 92)	Percent (%)
Gender of respondents	Male	19	21.0
Gender of respondents	Female	73	79.0
Education	None	42	45.7
	Primary school education	27	29.3
	Secondary school education	15	16.3
	Tertiary education	8	8.7
	University education	0	0.0
Legal status	Sole proprietorship	66	71.7
Legal status	Partnership/joint owned	26	28.3
Initial capital investment (Tshs)	Below 1,000,000	71	77.2
	1,000,000–5,000,000	12	13.0
	5,000,001–10,000, 000	9	9.8
	10,000,001–20,000,000	0	0.0
Number of employees in handicrafts MSEs	1–4	85	92.4
	5–49	7	7.6
	50–99	0	0.0
Export experience in handicrafts	1–5 years	54	58.7
	6–10 years	33	35.9
	More than 10 years	5	5.4

As for the level of education among the entrepreneurs, findings show that 45.7% of the sampled handicrafts MEs had not attended school at all, 29.3% have primary education, 16.3% have acquired secondary education, and 8.7% have above secondary education (Table 1). This reveals that more actors in the handicrafts sector do not have higher levels of education and that their performance is not accounted for by higher education but by the use of existing skills and locally available resources without disturbing the cultural and social balance. This is supported by Deb and Molankal (2021), who found that artisanal activities do not need formal education and use the family as a production unit. Furthermore, results show that 71.7% of the respondents operate as sole proprietors, while 28.3% as partners (Table 1). It is, therefore, clear that the majority of owners of handicrafts exporting MEs are sole proprietors. This is attributed to simple legal requirements, limited financial capital among MEs, a high degree of autonomy, and a greater incentive to pursue risk projects with higher profits and growth rates (Kazungu, 2020a; Mukami, 2012).

Findings also revealed that 92.4% of the sampled MEs had employees between one and five, while 7.6% had above five employees. It was also revealed that 77.2% of the respondents had a capital investment below one million, 13 per cent between one and five million, and 9.8% between 5 and 10 million (Table 1). These findings put forward that most rural handicrafts are in the category of micro-enterprises as stipulated by the SMEs development policy of 2003 that a microenterprise has one to four employees and capital investment in the machinery of Tshs up to five million (URT, 2012). This low initial capital level is attributed to the fact that handicraft MEs use simple technologies and technical know-how, coupled with lower capital investments. In terms of export experience, it was found that 58.7% had export experience of 1-5 years, 35.9% between 6 and 10 years and 5.4 had more than 10 years of experience. This implies that collectively 94.6% of sampled MEs have export experience of fewer than ten years. Rutashobya and Jaensson (2004) found similar findings, who observed the dominance of handicrafts operators with experience of fewer than 10 years of export in the industry.

The Rural-Based Handcraft Marketing Framework

The study developed the marketing framework used by the rural-based handcraft MEs. Results from interviews identified that a large share (86.4%) of handicraft products that are produced by handicraft operators in Ololosokwan and Sukenya are for export. These include sandals, beads “shanga,” baskets, necklaces, belts, earrings, table mats, and Maasai dresses. The remaining (13.6%) are sold in the local markets in Arusha and other nearby regions. This shows evidence of export potential for a variety of handicraft products marketed by artisans in Tanzania (Anderson, 2011; Ipsos-Synovate, 2012; Kazungu & Mchopa, 2022). These handicrafts products are made by the local artisans in the study areas and are exported indirectly through joint marketing and agents. The dominance of this export mode emanates from the reason that most rural-based handicrafts are constrained with capital and therefore operate on a small scale, limiting them from engaging in direct exports. Therefore, local handicraft operators do not fully enjoy the profit generated from their exports so long as they share with the agents who are in a good position to negotiate better prices (Mukami, 2012). These handicrafts products are largely exported to neighboring countries mainly Kenya and Uganda, for export destinations. This is yet another evidence of the effective use of trade relations like the EAC by the rural handicraft operators.

BDS and Participation of Rural-Based MEs in Export Markets

This study intended to determine the nexus between BDS and the participation of rural-based MEs in export markets. Findings show that handicraft MEs in Ololosokwan and Sukenya access BDS in the form of training, product designs, and technical support in the way of simple machinery and their uses. They also access training in micro credits and formations of credits societies like VICOBA. Other BDS components include training on leadership skills and business networking. However, all these services were hardly accessed once a year among the rural-based handicraft operators. It was further revealed that the 96 handicrafts operators in Ololosokwan and Sukenya obtain BDS from three institutions: (i) Pastoral Womens’ Council (PWC), (ii) United Nations Educational, Scientific and Cultural Organisation (UNESCO), and (iii) Ujamaa Community Resource Team (UCRT). All these institutions are not affiliated with or funded by the Government of Tanzania. The study findings also confirm the need for programs to widen access to BDS among Tanzanian rural-based handicraft operators. This remark corroborates arguments by Singh and Fatima (2015) on the need to run more such programs to upgrade skills among the owners and operators of the handicraft industry. Further, the findings of this study are supported by Agarwal, et al. (2023) and Malauri et al. (2022), who recommended more policy actions to strengthen the provision of BDS resources among local entrepreneurs.

Multivariate Logistic Regression Analysis for Participation of Rural-Based Handcraft MEs

The study adopted the Multivariate logistic regression to model the association between BDS (i.e. entrepreneurship training programs, leadership training, technical support, and business networks) and participation of rural-based MEs in export markets. The Omnibus test of model coefficients reveals that the overall relationship between BDS and participation of rural-based MEs in export markets was significant (Chi-square of 32.774 and p = .000 < .05). Further, the Hosmer and Lemeshow test indicates a good fit of the model with a positive and significant relationship between the predictor variables (BDS) and the log of the odds of the outcome variable (participation in export markets) (i.e., p = .801 > .05) (Hosmer et al., 2013; Maity & Sahu, 2020). The Cox and Snell R square and Nagelkerke R square values indicate that 18.9 to 74.5% of the variation in participation of rural-based MEs in export markets was explained by the variation in access BDS (Table 2).

Table 2.

Multivariate Logistic Regression Analysis.

Variable	β	SE	Wald	df	Sig.	Exp(β)
Entrepreneurship training	1.759	0.454	14.997	1	0.000	5.805
Leadership training	2.330	0.798	8.532	1	0.003	10.273
Technical support	3.499	1.051	11.091	1	0.001	0.030
Business Networks	1.851	1.088	2.896	1	0.089	0.157
Constant	4.682	1.044	20.121	1	0.000	108.00

Note. Log likelihood = 14.262^b; Cox and Snell R² = .189; Nagelkerke R² = .745. Omnibus test of Model Coefficients (Chi-square = 32.774; Sig 0.000). Hosmer and Lemeshow Test (Chi-square = 0.307; Sig 0.801). Outcome variable: Participation of rural-based MEs in export markets = Binary: Y = if participating, Y = 0 if not participating.

The first hypothesized relationship is on the effect of entrepreneurship training programs on the participation of rural-based MEs in export markets. Results confirm a positive and significant relationship between entrepreneurship programs and the participation of rural-based MEs in export markets (β = 1.759, p = .000 < .05). Hence, hypothesis one (H1) is accepted and this implies that the probability of participation increases with entrepreneurship training programs by 5.805 times. This means that the more entrepreneurship training programs attended, the higher the chances of participating well in export markets.

The second relationship is on the influence of leadership training on participation in export markets by handicrafts MEs. The results in Table 2 reveal a positive and significant relationship (β = 2.330, p = .003 < .05). Thus hypothesis 2 is accepted and it is concluded that leadership training has a positive effect on participation in export markets by handicrafts MEs. This means that a unit increase in leadership training increases the probability of participating by 10.273 times (Table 2). Thus, entrepreneurs with leadership skills are more likely to participate well than those without.

The third hypothesized relationship is on the influence of technical support on rural-based MEs’ participation in export markets. The results in Table 2 show a positive and significant relationship (β = 3.499, p = .001 < .05). Hypothesis 3 is therefore accepted and a conclusion made is, that Technical support is positively influencing participation in export markets by handicrafts MEs. This means that an increase in technical support increased the probability of participating by 0.030 times. The findings confirm that firms with access to technical support services are more likely to participate than those without. Results from interviews disclosed that MEs in the study area benefited from technical support such as capacity building, product designs and development, machines and how to use the machines. These handicrafts MEs are also supported with tools like cutting tools, wood burning tools, scissors, craft knives, pliers miter boxes, glue guns, and cutting boards.

Moreover, the fourth hypothesized relationship is on the influence of business networks on the participation of rural-based MEs in export markets. Results indicate business networks were not statistically associated with the participation of rural-based MEs in export markets (β = 1.851, p = .089 > .05) (Table 2). Hypothesis 4 is therefore not accepted and it is concluded that Business networks are positively and insignificantly influencing participation in export markets. This observation is in line with the interviews where it was further revealed that the use of business networks is poor due to a low level of education and poor communication skills by the handcraft operators in the study area. It was further disclosed that most of them speak their native Maasai language and cannot read and write properly. This calls for the need to invest in business networks, as Kazungu (2020a) recommended to facilitate MEs’ access to network linkages and thus participate and perform well in export markets.

The fifth hypothesized relation was on the overall BDS influence on the participation of handicrafts MEs in export markets. Results reveal a positive and significant relationship (β = 4.682, p = .000 < .05). thus the hypothesis that collectively, BDS have a positive influence on the participation of handicrafts MEs in export markets is accepted. Thus it is suggested that BDS’s positive and significant contribution to rural-based handicraft MEs in export markets. BDS increases the chances of participation in export markets among MEs. The findings are in tandem with those by Kweka et al (2022b), Mori (2016), and Kimando et al. (2012), who established the relevance of BDS programs to MEs.

Using the model coefficients in Table 2, the multivariate logistic regression equation can be transformed into equation (3):

\begin{matrix} PEM = & 1.851 + 1.759 ET + 2.330 LT \\ + 3.499 TS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \end{matrix}

(3)

Conclusion, Recommendations, and Contribution of the study

The study establishes that individual variables collectively influence Tanzanian rural-based MEs’ participation in export markets. Findings in the multivariate logistic regression revealed that the overall relationship between BDS and participation of rural-based MEs in export markets was significant. It was also realized that 18.9 to 74.5% of the variation in participation of rural-based MEs in export markets was explained by the variation in access to BDS. Therefore it is concluded that BDS contributes largely to the participation of rural-based MEs in export markets, so handicrafts exporting MEs should use these BDS for effective participation and performance in export trade.

The study recommends that the government should come up with a supportive institutional framework and policy to support the provision of BDS more frequently, at relatively low costs and centered on the specific needs of MEs. This will help teach entrepreneurial aspects to rural-based exporting MEs and enable rural-based handicraft operators to meet market requirements, improve their participation in export markets, and transform them into sustainable businesses that contribute significantly to the country’s socio-economic development. There is also a need for intermediaries to establish networking platforms and capacitate handicrafts operators with business networking programs to tap strong network linkages with suppliers, traders, and among themselves, which will fast-track their access to more foreign markets. These will enable exporting MEs to access market information and markets easily. Intermediaries here include the Ministry of industry, trade and Investment, Tanzania Investment Centre, TanTrade, trade associations, private BDSPs, TanTrade, SIDO, and VETA, which are pioneers of the development of this industry. In addition, BDSPs should identify the specific needs by the specific categories of the actors in the handicrafts industry and design services that are tailored to serve such needs. Particularly, they should embrace conceptual skills such as product innovation, business communication and networking, cross-border trade, formalization, licensing, documentation, and export process as identified in this study. Access to such skills will take the Tanzanian rural-based handicrafts MEs to sustainable participation and effective performance in export markets as a result of efficiency and improved product quality strategies imparted through BDS. Lastly, this study contributes to advances in the literature on effective BDS strategies in the handicraft industry. Most scholarly works on BDS relate it with firm performance/export performance and are largely on manufacturing SMEs. This study is peculiar as it brings new insights into how BDs are linked with export market participation among rural-based handcraft MEs. More importantly, the study is based on marginalized Maasai handicrafts operators who managed to export from the very rural areas in an emerging nation.

Limitations and Suggestions for Future Studies

In designing this study, efforts were made to minimize its limitations. Nevertheless, two main limitations should be considered while interpreting the results and conceptualizing future research on the relationship between BDS, participation of rural-based MEs in export markets and trends in the Tanzanian handicrafts industry. First of all, this study was limited to rural-based handcrafts exporting MEs in a particular geographical area (i.e., the Maasai land of Ololosokwan and Sukenya villages in Ngorongoro Arusha, Tanzania). A replica of the study in other geographical territories of similar nature of artisans, social-economic context, institutional contexts and settings can validate these findings. The second limitation is a large proportion of the valid sample used in this study has exporting experience of not more than 5 years. This limits access to more insights into the export trends and performance of exporting handicrafts from rural producers. Therefore, future studies should consider a population of handcrafts exporting MEs with more experienced objects to explore more information in the industry.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Isaac Kazungu

Data Availability Statement

Data sharing not applicable to this article as no datasets were generated or analyzed during the current study.

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Business Development Services and Participation of Rural-Based Micro Enterprises in Export Markets: Exploring the Heterogeneity of the Tanzanian Handicrafts Industry

Abstract

Keywords

Introduction

Literature Review and Hypotheses Development

Definition and Classification of BDS

MEs Conceptualization and Participation in Export Markets

Entrepreneurship Training and MEs Participation in Export Markets

Leadership Training and Participation in Export Markets

Technical support and Participation in Export Markets

Business Networks and Participation in Export Markets

BDS and Participation in Export Markets

The Proposed Conceptual Model

Methodology

Results and Discussion

Demographic Description of Respondents

The Rural-Based Handcraft Marketing Framework

BDS and Participation of Rural-Based MEs in Export Markets

Multivariate Logistic Regression Analysis for Participation of Rural-Based Handcraft MEs

Conclusion, Recommendations, and Contribution of the study

Limitations and Suggestions for Future Studies

Footnotes

Declaration of Conflicting Interests

Funding

ORCID iD

Data Availability Statement

References